Credit Card Interest Calculator
See exactly how much interest your credit card charges — per day, per month, and per year. Understand the true cost of carrying a balance.
Enter your balance and APR to see your interest costs.
How Credit Card Interest Works
Credit card interest is calculated daily, not annually. Here's the formula:
- Daily Rate = APR ÷ 365
Your 24.99% APR becomes 0.0685% per day. - Daily Interest = Balance × Daily Rate
A $5,000 balance at 24.99% APR costs about $3.42 per day. - Credit cards typically use the Average Daily Balance method: Your balance is averaged across the billing cycle, multiplied by the daily periodic rate, and applied monthly — interest is usually not compounded daily.
This is why credit card debt can grow quickly — interest is calculated on your average daily balance and added to your account each billing cycle. If you carry a balance month to month, you're paying interest on both your purchases and previously accrued interest.
Use the Payoff Calculator to see a full amortization schedule.
How Credit Card Interest Is Calculated
Credit card interest may seem straightforward — your APR divided by 365 gives the daily rate, which is applied to your balance. But the details matter. Most credit card issuers use the Average Daily Balance (ADB) method, which calculates interest based on the average balance over the billing cycle rather than the balance on any single day. This means that making payments mid-cycle can reduce your interest charges.
Here's the step-by-step calculation: First, the daily periodic rate is calculated by dividing your APR by 365. For a 24.99% APR, that's 0.0685% per day. Second, your average daily balance is computed by adding up each day's balance during the billing cycle and dividing by the number of days in the cycle. Third, the average daily balance is multiplied by the daily periodic rate and then by the number of days in the billing cycle to get your monthly interest charge.
Factors That Affect Your Interest Charges
Several factors influence how much interest you pay each month:
- Your APR: The annual percentage rate is the biggest factor. A card with 29.99% APR charges twice as much interest as one with 14.99% APR on the same balance.
- Average daily balance: Making payments earlier in the cycle reduces your average daily balance and thus your interest charges.
- Grace period: If you pay your statement balance in full each month, you typically get a grace period and pay no interest on purchases.
- Cash advances: These usually have higher APRs and start accruing interest immediately, with no grace period.
How to Minimize Credit Card Interest
The most effective way to minimize interest is to pay your statement balance in full each month, taking advantage of the grace period. If you carry a balance, make payments as early as possible in the billing cycle to reduce your average daily balance. Consider requesting a lower APR from your card issuer — many will reduce your rate if you have a good payment history. Finally, look into balance transfer offers with 0% introductory APRs to give yourself time to pay down the principal without accruing interest.